X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

LAS VEGAS-Harrah’s Entertainment Inc. has submitted requests to tap the remaining $740 million of its $2 billion senior secured revolving credit line “in light of the continuing uncertainty in the credit market and general economic conditions.” The additional money would be used for “general corporate purposes, including capital expenditures,” the company said.

Harrah’s owns Caesars Palace, Flamingo, Bally’s, Paris and the Rio, all on the Las Vegas Strip. In January, it delayed the completion and opening of its 660-room addition to Caesars Palace indefinitely. Earlier this week, it suspended matching contributions to employee retirement programs.

The move has caused market speculation that the company may be following in the footsteps of Station Casinos which, like Harrah’s, is loaded down with billions of dollars of debt after being taken private. Station Casinos proposed a pre-packaged bankruptcy earlier this month after drawing down its credit line.

Station Casinos, an owner of 18 casinos including Red Rock and the new Aliante Station, has offered to pay investors 10- to 50 cents on the dollar in secured notes and cash in exchange for some $2.3 billion of existing bonds. Affiliates of the Fertitta family and Colony Capital have agreed to put up as much as $244 million in new capital to maintain their current interests in the company, according to Station Casinos.

Harrah’s was acquired in January by private equity firms TPG and Apollo Management. The company is weighted down with $23.9 billion in debt, much of it attributable to the privatization. TPG and Apollo, each of which put up $1.3 billion in the buyout, have since written down their stakes by approximately 20%. Other investors include Blackstone Group, which put up $275 million.

The 660-room Octavius Tower addition to Caesars Palace is part of a larger $1-billion expansion of the resort, the other aspects of which are proceeding as planned toward a mid-summer 2009 opening. Harrah’s spokesperson Gary Thompson told GlobeSt.com in January that the 23-story tower will be skinned but not fit out but that the ground level that connects to the rest of the resort will open mid-summer along with an additional 110,000 square feet of meeting and convention space, an expanded pool and garden area and three additional luxury villas. The estimated total capital expenditures for the project, excluding the costs to complete the deferred hotel rooms, are now estimated at approximately $681 million.

Las Vegas Convention and Visitor Authority issued its report on December last week. The result was a 1,000-point decline in hotel occupancy to 76.7% in December 2008 from 87.4% in December 2007. The LVCVA also reported a 14.2% decline in the average daily room rate to $96.39 from $112.36 in December 2007 and an 11% decline in visitor volume to 2.7 million from 3 million in December 2007.

The number of hotel rooms in the market jumped by 5.7% during the year, to 140,529 from 132,947. More than 13,000 hotel rooms are still slated to come online in Las Vegas in 2009, including more than 6,000 hotels rooms at Citycenter [even without the 400-room Harmon Hotel, which was recently delayed] and an additional 3,890 rooms at Fontainebleau Las Vegas.

A late October report by the Las Vegas Convention and Visitors Authority pegged the number at nearly 14,000 but that was before the Caesars Palace announcement. Already removed from the list was the 3,000-room Cosmopolitan resort rising between Citycenter and Bellagio, which is now owned by the lender and scheduled for completion in 2010.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.